Topics Dividend Stocks

Dorel Industries $36.97 - Toronto symbol DII.B

DOREL INDUSTRIES $36.97 (Toronto symbol DII.B; TSINetwork Rating: Extra Risk) (514-934-3034; www.dorel.com; Shares outstanding: 32.3 million; Market cap: $1.2 billion; Dividend yield: 4.3%) makes a range of items: ready-to-assemble home and office furniture; juvenile products such as car seats, strollers, high chairs, toddler beds and cribs; and bicycles and other sporting goods.

In the three months ended June 30, 2016, sales fell 4.8%, to $637.3 million from $669.6 million a year earlier (all figures except share price in U.S. dollars).

Excluding one-time items, Dorel’s earnings dropped 12.6%, to $14.5 million, or $0.45 a share, from $16.2 million, or $0.51. The company gets half of its sales from outside of North America. The high U.S. dollar hurt the contribution of those foreign sales. As well, industry-wide price discounting hurt revenue and profits from its bicycle sales.

The company’s outlook remains positive: costs are falling as it shifts the manufacture of juvenile products from Europe and North America to China; and investments in its e-commerce operations are paying off, especially for its distribution network.

The stock trades at a low p/e of 12.2 times Dorel’s forecast 2016 earnings of $2.32 U.S. a share. It yields a high 4.3%.

Dorel Industries is a buy.

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